CHAPTER ONE

ETHICS AND BUSINESS

NATURE OF BUSINESS
-

Economics:
satisfy
needs
and
wants
from
scarce/limited resources
Business: Relationships > Satisfy needs and wants >
Help build a community
Doing business is good.

NATURE OF ETHICS
1

Ethics
-

Standards of right and wrong actions, imposed by

an external group or culture
Rules of conduct provided by an external source; it
is affected by societys perception of how one
ought to behave

12 Principles/Basis for Business Ethics

-

Honesty

Integrity

Promise-keeping and Trustworthiness

Loyalty

Fairness

Concern for Others

Respect

Law-abiding

Commitment to Excellence

Leadership

Reputation and Morale

Accountability

It is concerned on what ought to be done

Ethics vs. Morals

IMPORTANCE OF ETHICS IN BUSINESS

Ethics are shaped by society, while morals are

shaped by individual belief

Ethics are objective, while morals are subjective

Ethics gives us a general idea on what is right and what is

wrong. Without it, any individual, a businessman or a
common citizen, can set their own standard/rules on what is
acceptable and what is not.

Ethics are governed by guidelines within a

particular time and place, while morals transcend
cultural norms

Difference of Ethics and Morality

Meaning

Why we do
something.

Acceptabilit
y

The rules
provided by
an external
source.
Example:
religion,

Because it is
dictated by
the society.

Governed by
professional
and legal
guidelines
within a
particular

Business Ethics
-

Study of right and wrong conduct in business

Perceptions of society about behavioral principles in

business

Involves the analysis and questioning of ethical

standards and policies affecting business

Ethics

Morality

workplace,
government,
etc.
An
individuals
own
principles.

time and
place.
Because we
believe that
it is
right/wrong.

Morality
transcends
cultural
norms.

Ethics also govern the manner on how business leaders and

managers deal with ethical issues and problems that affect
the flow of business.
Conclusion
Business ethics gives an acceptable guide on resolving moral
problems and ethical issues affecting the business
transactions and the interactions of the people in the
corporate world.
RELATIONSHIP BETWEENETHICS AND BUSINESS

The business enterprise is an organ of society and its

actions have decisive impact on the social scene.
MORALITY OF PROFIT MOTIVE
Reasons of Making a Business
1. Personal satisfaction
2. Earn a livelihood
3. Serve the society through goods and services
4. To make a PROFIT

Without morality, business will be a chaotic human activity.

Unwritten laws that is written in the hearts of men that
should govern our human conduct where positive laws may
be absent or unclear.

Milton Friedman

Business is an integral part of human society.

Subject to moral rules and moral evaluation.

What is legal may not necessary be moral.

Laws are insufficient.
In todays technocrat-oriented business education, the trend
is to train managers to maximize profit by quantifying the
operation of business.
Peter Drucker

Only responsibility of business is to make profit so long as

one stays within the rules of the game and engages in open
and free competition without deception or fraud.
Peter Drucker

-it implies that businessmen have the right to

decide on the amount of profit they want to earn
in the process of selling goods and services to
customers.
b. Structure of business
The primary responsibility of business is to look for
customers and satisfy their needs and wants.

-a tacit guideline that governs business

activities including profit-making.

The Good and Bad Sides of Profit-Motive

A. The Good Side of Profit-Motive
1. Motivates people to do something meaningful.
2. Promotes ingenuity and cleverness in running a
business.

Ethical Considerations of Profit-Motive in Business:

1. Earning profit is a good and valid activity in business.
*Ethical discernment is required for the businessman:

3. Makes people productive.

Is my profit fair enough for me and my customers?

4. Generates potential capital for the business

Did I consider important factors and parameters in

making profit such as the costs of goods sold,
overhead, mark-ups, profit margins, and the like?

B. The Bad Side of Profit-Motive

1. Promotes rivalry among competitors.
2. Makes people focus only on making money.

2. Making excessive profits is totally wrong. It leads to greed,

avarice and manipulation of the customers.
3. Profit is not the be-all and the end-all of doing business.

3. Turns the businessman from being a reflective and

a questioning person.

Factors to be considered in business:

4. Promotes self-interest rather than the common

good.

THE ASSUMPTIONS OF PROFIT MOTIVE

1. Profit-motive in business is an ethical issue
2. Profit-motive as an ethical issue operates within the two
important aspects of our human conduct:
a. Freedom

Customers satisfaction
Respect to the environment
Enhancement of the quality of life and the
preservation of the society

4. The teachings of the Catholic Church do not totally

condemn profit as part of business activity.
Pope Pius XI, in Quadragesimo Anno (1931), does not
prohibit the producer from enriching himself provided: One

respects the laws of God, does not prejudice the rights of

others, and works according to faith and right reason.